Payday borrowers warned to consider other options
first

Update 5 November 2012

Press release

Latest research from Turn2us and the Consumer Credit
Counselling Service (CCCS) has revealed that people are turning to
payday loans to bridge a financial gap in their household income,
before checking out other easier and less-costly ways to maximise
their income.

Over a quarter (27 per cent) of people who took out a payday
loan didn’t look into any other financial solution ahead of taking
out the fast loan, and almost half of people (48 per cent) who are
currently not working and have taken out a pay day loan have never
checked their welfare benefits eligibility.

Alison Taylor, Director of Turn2us, said: “Financial hardship
can be devastating for individuals and families. We know that
people can be reluctant to turn to charities or claim welfare
benefits when times get tough, mostly because of the perceived
stigma attached. Of the 13 million people living below the poverty
line in the UK, only 7.6 million are claiming state support. So
with £19 billion in state benefits going unclaimed each year, we
would urge anyone thinking about borrowing a payday loan to find
out if they are entitled to any financial support first and avoid
unnecessary debt.”

Over half of those (51 per cent) who have taken out a payday
loan regret their decision to take out their first and around a
third (30 per cent) are worse off since they took it out. However,
over two-thirds (68 per cent) of people who have taken out a payday
loan in the last 12 months have taken out two or more and over one
in six (17 per cent) of people have taken out a staggering seven or
more loans.

Over two-fifths (43 per cent) of respondents who work full time
said they took out their first payday loan because they needed the
extra cash before payday, with nearly a quarter (24 per cent)
reporting that they needed the money to pay for necessities, such
as food for their family. However, people who are unemployed are
nearly twice as likely to have taken out a payday loan – than those
who work.

Delroy Corinaldi, CCCS Director of External Affairs, said:
“Payday loans can be an extremely expensive way to borrow, and this
kind of debt can quickly spiral out of control. This research
shows just how many people are turning to expensive payday loans
even though they may be entitled to welfare benefits that they are
not aware of. The key message for anyone struggling to cope
is to consider all of your options, and seek free advice from a
charity such as Turn2us or CCCS.”

When asked if they had sought alternative sources of help before
turning to a payday loan lender, over a third of respondents (35
per cent) said they tried to take out or extend their bank
overdraft, while over one in four (29 per cent) tried to take out a
new credit card or extend the limit on their current credit card. A
quarter (26 per cent) asked friends or family for help first.

Turn2us, part of national charity Elizabeth Finn Care, helps
people access the money available to them – through welfare
benefits, charitable grants and other help. CCCS helps
400,000
people every year with their debt problems.

Individuals can go to www.turn2us.org.uk to access a
quick and easy benefits calculator to work out which welfare
benefits and tax credits they might be entitled to and a Grants
Search database giving access to over 3,000 charitable funds.

Notes to editors

All figures, unless otherwise stated, are from YouGov
Plc. Total sample size was 505 adults who have taken out a
payday loan. Fieldwork was undertaken between 20th - 28th June
2012. The survey was carried out online. The overall figures
have been weighted and are representative of all GB adults (aged
18+).

About Turn2us

Turn2us is part of the national charity Elizabeth Finn
Care.

Turn2us helps people in financial need gain access to welfare
benefits, charitable grants and other financial help – online, by
phone and face to face through our partner organisations.

The Turn2us free, accessible website - www.turn2us.org.uk is designed to
help people access the money available to them – through welfare
benefits, charitable grants and other help.

The website has a number of tools to make the process simpler,
including a grants search, benefits calculator and ‘find an
adviser’ tool to help locate someone to speak to.

About CCCS

CCCS’s ethos is to help the “can’t pays”, not the “won’t pays”,
and does not condone debt avoidance. CCCS always aims to help its
clients pay back what they owe, in a realistic timescale and manner
that is suited to each individual’s situation.

CCCS is self-funding. Lenders share with the charity the
benefit they receive from its operation, making a donation from the
money repaid to them. This allows CCCS to retain its independence
and ensure that its advice is always in the best interest of the
client.

The CCCS free phone helpline 0800 138 1111 is open 8am to 8pm,
Monday to Friday and 9am to 3pm on Saturday. CCCS Debt Remedy
is available at Consumer Credit Counselling Service website
(link opens in a new window).

- Ends -

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